US commission warns Congress about China oil needs

Washington (Platts)--9Nov2005

A US panel on China Wednesday advised Congress to pay greater attention
to that country's energy needs and its attempts to "hoard" crude to avoid a 
"collision course" over oil supplies. 

     The US-China Economic and Security Commission, created by Congress in
2000, said in an annual report that lawmakers must work with the White House
to establish a coherent approach to China on energy and ensure US cooperation 
with Beijing where possible. 

     In order to avoid a clash over oil, "which could entail terrible human
and economic costs for both nations and threaten global stability, it is vital
the United States work with China to attempt to remove or reduce the points of
friction," the 12-member commission said, noting that China became the world's
second-largest crude consumer in the past year.

     However, the panel's chief recommendation on energy was that the US must
discourage China from trying to control oil at the point of production, as
evidenced by its national oil companies' recent acquisitions. "The United
States needs to work diligently to persuade China to participate with the
International Energy Agency and switch its strategy of acquiring and hoarding
oil reserves to purchasing its supplies on the open market," the report said.

     The commission also said policymakers need to closely examine China's
growing relationship with the Saudi Arabia to ensure it does not hurt the
US-Saudi relationship. The kingdom is China's leading oil supplier.

     In addition, the five-year old panel urged Congress to "instruct the US
intelligence community" to increase their surveillance of China's activities
in Africa, Central Asia and "especially the Western Hemisphere," where China
has become active; and increase joint research, particularly on coal
technologies and energy efficiency.

				--Mike Schmidt, mike_schmidt@platts.com

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